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The Morning Ledger: CFO Network Conference Revs Up

The Morning Ledger from CFO Journal cues up the most important news in corporate finance every weekday morning. Send us tips, suggestions and complaints: david.hall@wsj.com. Get The Morning Ledger emailed to you each weekday morning by clicking here. Follow us on Twitter @CFOJournal.

The Wall Street Journal CFO Network conference in Washington, D.C. shifts into high gear today. We’ll hear from a wide range of influential speakers. Among the highlights: SEC Chairman Mary Jo White discusses what’s in store for disclosure and accounting rules; ISS executive director Patrick McGurn, GMI Ratings co-founder Nell Minow and former SEC chief accountant Lynn Turner tackle the issue of shareholder rights; Marriott CEO Arne M. Sorenson offers lessons on moving up the ladder—from CFO to CEO; and House Ways and Means Committee Chairman Dave Camp and Ranking Member Sandy Levin tell us what tax-policy changes are on the horizon. Participants will also break off into topic-specific groups to grapple with issues like how to cope with looming health-care changes, developing corporate talent and evaluating global risks. Read the full program here.

On the opening night of the conference Monday, Honeywell CEO David Cote warned that retiring baby boomers will “literally crush the system,” so deficit reduction must be addressed before the U.S. finds itself on the hook for $1 trillion a year in debt-interest payments alone. Mr. Cote said he is cautious about the global recovery, and said Honeywell is modeling for average GDP growth of 2% annually in the U.S. over the next three years, Maxwell Murphy reports from the conference. Honeywell doesn’t expect any growth in Europe during that time, but it sees 4% a year growth in India and 6% to 7% yearly in China, because it’s “not worth betting anything bigger.”

Mr. Cote, a former CFO, also said that finance chiefs can make good CEOs, but not if they only “sit in the office and do finance stuff.” They have to immerse themselves in all areas of the business. Honeywell’s divisional CFOs are often top candidates on other companies’ and recruiters’ CFO wish lists, so he said it’s important to make them happy by creating an exciting place to work, as “90% of people want to be part of something bigger than themselves that’s successful.” Watch a video from Mr. Cote’s interview here.

THE DAY AHEAD:

May housing starts are expected to continue their march upward, extending a rebound that is helping shore up the U.S. recovery, Bloomberg reports. Economists expect builders broke ground on 950,000 houses at an annualized rate, up 11.4% from April’s 853,000 pace. Separately, consumer prices for May are expected to remain subdued.

Delaware shows two faces. A tussle between competing arms of Delaware’s government could tarnish the state’s business-friendly image, writes Vipal Monga in today’s Marketplace section. At issue is the unclaimed-property law, which has an outsize impact in Delaware, adding more money to state coffers than corporate income-tax revenue. About a year ago, Delaware started worrying that it’s gaining a reputation for being too aggressive in pursuing unclaimed property. The state relaxed its policy and decided to run the effort from the secretary of state’s office. Those steps have put the agency at odds with the Finance Department, which wants to boost unclaimed-property revenue. The law leaves it up to the companies to report unclaimed property, but only 6% complied voluntarily in 2012. So the Finance Department began to order independent audits. And an even more aggressive stance could be in the works.

Boards looks for CFOs with general-management chops. Turnover among chief financial officers has surged this year, and corporate boards are increasingly filling CFO vacancies with executives who have general-management experience, rather than career finance types, writes Maxwell Murphy. Of the 100 CFOs appointed this year at 1,000 of the nation’s largest companies, 26% held a senior-executive post other than CFO, were a divisional president or held some other general-management job, according to an analysis for The Wall Street Journal by Korn/Ferry International. That is nearly double the 14% of 138 CFOs appointed during all of last year who came from general-management circles. “They do have finance and accounting underpinnings,” Joshua Wimberley, head of Korn/Ferry’s North American financial-officer practice, said of many of the managers-turned-CFOs. But boards are looking for candidates they can ultimately promote to chief executive or chief operating officer.

Treasurers hunting for higher yields. Corporate treasurers are starting to position themselves for a period of slightly higher interest rates and looking for ways to safely boost the yields on cash assets, writes Emily Chasan. “A lot of treasurers are now thinking that at some point we’re going to see an increase in these rates, and that point is getting closer and closer,” said Anthony Carfang, partner at Treasury Strategies, which advises corporate treasurers. For treasurers that hold long-dated assets, “they don’t want to get caught holding a 10-year note with a 2% market rate when rates jump.” Still, with yields low in nearly every asset class, most corporate treasurers are still thinking about how to reposition cash portfolios, and only only a handful have “pulled the trigger” on making more aggressive investments, Mr. Carfang said.

CORPORATE NEWS:

KPMG ex-partner Scott London is arraigned. Former KPMG senior partner Scott London was arraigned in federal court, where a not-guilty plea was entered on his behalf, although he is expected to plead guilty once certain procedural matters are resolved, the WSJ reports. Mr. London is accused of securities fraud for providing confidential information about KPMG clients to a friend as part of an insider-trading scheme. Mr. London faces up to 20 years in prison, though he is likely to receive a lesser sentence under federal sentencing guidelines. Mr. London told reporters that he hopes to move past the scandal and get a new job. “I won’t be practicing before the SEC, but it’ll be something,” he said. “I’ll wait tables.”

How Clearwire became the darling of telecom. The battle over Clearwire heated up a notch yesterday, when Sprint sued Dish, saying its offer to buy Clearwire shares violates Sprint’s rights as a shareholder and Delaware law. Dish, which has said its offer was lawful, is considering its options. The spectrum has become a prized asset thanks to a sea change in how people use their mobile devices, writes the WSJ’s Anton Troianovski. Without it, Dish and Softbank‘s opportunities to offer a new slate of wireless services could be limited. Rather than using the Clearwire spectrum to build a national network, SoftBank and Dish have said they would use it to provide additional capacity in areas where data use is highest.

Private-equity-backed businesses exploit tax breaks.The FT has been crunching the numbers on corporate taxes paid by big U.K. businesses and finds that private-equity-backed businesses—including Alliance Boots, New Look and Odeon—have been able to pay less tax than their listed competitors partly by deducting debt interest payments from their tax bills. The FT study aggregated the amounts of corporation tax paid over the past six years by nine U.K. private-equity-owned consumer brands, and compared them with the tax paid by their closest listed competitors. “The analysis underscores how private-equity groups tend to exploit tax advantages more actively than other companies. Using loans to help finance their acquisitions, they have become one of the biggest beneficiaries of the tax deductibility of interest payments,” the FT says.

Loeb ramps up pressure on Sony. Investor Daniel Loeb’s hedge fund Third Point has boosted its stake in Sony to 6.9%, ratcheting up an effort to persuade the Japanese electronics giant to launch an IPO of its entertainment division, the WSJ’s Dana Cimilluca reports. Mr. Loeb has argued that Sony could boost its share price dramatically by following his proposals, which he says would prompt the market to more fully value the entertainment assets. Sony has said the board will consider Mr. Loeb’s proposals and whether they are in the best interests of the company. Sony’s annual shareholder meeting is on Thursday in Tokyo, where a new board is expected to be voted in.

ECONOMY:

G-8 leaders tackle tax policy. British Prime Minister David Cameron will lead talks on tax evasion and avoidance at the G-8 meeting in Northern Ireland today. The aim is to form action plans to increase transparency and make headway on automatic information exchange, ahead of the G-20 meeting in September at which members are expected to agree on concrete steps to tackle profit shifting by multinationals, the FT reports.

Yesterday, the U.S. and the EU said they would start talks to build a free-trade agreement to boost growth and create jobs across the Atlantic, the WSJ reports. Officials see an ambitious deal that will largely eliminate trade tariffs and harmonize regulations across a broad range of industries, greasing the gears of trans-Atlantic trade and investment. “It’s important that we get it right, and resist the temptation to downsize our ambitions just to get a deal,” President Obama said.

Obama: Bernanke has stayed ‘longer than he wanted.’ President Obama said Fed Chairman Ben Bernanke has stayed in his post “longer than he wanted,” one of the clearest signals the central bank chief will leave when his current term expires next year, Bloomberg reports. “Ben Bernanke has done an outstanding job,” Mr. Obama said in an interview with Charlie Rose, when asked about nominating him for another term, subject to Senate approval. “He’s already stayed a lot longer than he wanted or he was supposed to.” Watch the full interview here.

REGULATION:

Libor charges in U.K. British prosecutors filed criminal-fraud charges against former UBS and Citigroup trader Tom Hayes for allegedly trying to manipulate benchmark interest rates, the Journal’s David Enrich reports. It was the first move by U.K. authorities to seek criminal penalties against anyone allegedly involved in rigging Libor.

CFO MOVES:

Response Geneticssaid in a regulatory filing that interim Chief Financial Officer Kevin R. Harris will now hold the position on a permanent basis. He has served as interim CFO since joining the company in August 2012. As CFO Mr. Harris will receive a base salary of $264,000 as well as 100,000 stock options, and he will be eligible for an annual bonus of up to 35% of his base.

Waterlogichired John Skidmore as its chief financial officer. He was most recently CFO of PHS, according to Dow Jones Newswires.

Feroniahired David Steel as its chief financial officer. He succeeds Danesh Varma, who will act as a consultant to the company to assist with the transition of duties, according to a press release. Mr. Steel was most recently director of finance at Misys PLC.

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